The economics ministry announced that Japan will offer additional subsidies of up to 590 billion yen ($3.9 billion) to the semiconductor joint venture Rapidus. The announcement coincides with Japan's competition against the United States and Europe for chipmakers, as it offers tens of billions of dollars in public backing.

Rapidus, comprising several Japanese technology firms along with the US giant IBM, intends to produce state-of-the-art two-nanometer logic chips in the northern province of Hokkaido by the end of this decade.

To help triple the sales of domestically manufactured chips in Japan to over 15 trillion yen by 2030, the government has already announced plans to make up to four trillion yen in state incentives available.

Rapidus has already secured public funds totaling several hundred billion yen. The government aims to revive Japan's technology industry to its former glory of the 1980s when companies such as Toshiba and NEC dominated the microprocessor sector.

Due to competition from South Korea and Taiwan, Japan's market share globally plummeted from over 50% to about 10%. In February, the $8.6-billion semiconductor giant Taiwan Semiconductor Manufacturing Company (TSMC) inaugurated a new facility on the island of Kyushu in southern Japan.

The Japanese government has pledged to cover more than 40 percent of the costs for the facility. TSMC, enticed by increased Japanese government support, has announced plans for a second facility to produce more advanced chips. Additionally, reports suggest that TSMC is considering the establishment of a third and possibly a fourth facility in Japan.

Japan's Kioxia and the United States' Micron are among the companies receiving state funds. TSMC's establishment of a new facility is also part of its effort to diversify production away from its home base in Taiwan. China asserts sovereignty over the self-ruled island and has not ruled out the use of force to achieve its goals.

TSMC is constructing a second factory in the US state of Arizona and intends to establish another in Germany, marking its inaugural facility in Europe, enticed by public funds allocated elsewhere.

However, despite subsidies totalling $52.7 billion extended by US President Joe Biden’s administration for the sector, the Arizona TSMC plant has encountered delays and faced disputes with unions.

The recently constructed TSMC plant in Japan was completed in a relatively short span of 22 months, garnering commendation from the company's founder Morris Chang, who made a rare visit to inaugurate the facility.

Image source: Barron’s News